Islamic participation banks earn $450 mln in profit in 2011

Participation banks, which refrain from being involved in financial activities deemed forbidden in Islamic teaching, increased their profit by 6 percent, to TL 850 million ($450 million), in 2011 compared to 2010.

According to a statement released by the Participation Banks Association (TKBB) on Monday, the financial institutions' assets and equity capital have also grown by 29 percent and 13 percent, respectively, year-on-year to TL 56 billion and TL 6.1 billion. Their assets were only TL 3.9 billion in 2003.

Turkish participation banks -- namely Bank Asya, Türkiye Finans, Kuveyt Türk and Albaraka Türk -- operate under the Turkish Banking Law and are regulated and supervised by the Banking Regulation and Supervision Agency (BDDK). The total amount of money deposited into those four banks grew by 18 percent to TL 39.8 billion last year, Monday's statement noted.

"The volume of loans they extended to businesses and individuals, likewise, increased by 28 percent, to TL 41.1 billion," it said. The four banks employ nearly 14,000 people in 685 branches across the country.

Islamic banking has a similar rationale to conventional banking except that it operates in accordance with Shariah rules on transactions, forbidding interest as well as investment in businesses that provide goods or services considered “haram,” or contrary to Islamic principles.